2. Problem 1
Sailco Corporation must determine how many sailboats should be
produced during each of the next four quarters (one quarter three
months). The demand during each of the next four quarters is as
follows: first quarter, 40 sailboats; second quarter, 60 sailboats; third
quarter, 75 sailboats; fourth quarter, 25 sailboats. Sailco must meet
demands on time. At the beginning of the first quarter, Sailco has an
inventory of 10 sailboats. At the beginning of each quarter, Sailco must
decide how many sailboats should be produced during that quarter. For
simplicity, we assume that sailboats manufactured during a quarter can
be used to meet demand for that quarter. During each quarter, Sailco
can produce up to 40 sailboats with regular-time labor at a total cost of
$400 per sailboat. By having employees work overtime during a
quarter, Sailco can produce additional sailboats with overtime labor at
a total cost of $450 per sailboat.
At the end of each quarter (after production has occurred and the current
quarter’s demand has been satisfied), a carrying or holding cost of $20
per sailboat is incurred. Use linear programming to determine a
production schedule to minimize the sum of production and inventory
costs during the next four quarters.
3. Problem 2
A multinational oil supplier produces two grades of gasoline, U (unleaded)
and L (leaded), which it sells for $1.10 and $1.00 per liter, respectively. The
refinery can buy three different types of refined oil, from three different
sources, with the following constituents and prices:
The U grade gasoline must have at least 50% of constituent A and not
more than 35% of constituent C. The L grade gasoline must not have
more than 30% of constituent C. Determine how the refined oils should
be mixed so as to maximize the profit.